'China's Tesla' NIO revs up $1B IPO

'China's Tesla' NIO revs up $1.2B IPO

Published October 23, 2018 – J.P. Morgan has led the largest debut ever by an electric vehicle (EV) maker on the New York Stock Exchange this fall.

Serving as an active bookrunner on the $1.2 billion IPO, the firm’s teams in China and New York helped NIO become listed as the first ever Chinese EV company on a global exchange.

“The EV industry is reaching an inflection point,” said Crystal Zhu from the Investment Banking coverage team in China. “Taking into consideration the lower maintenance and energy costs, electric and gas-fueled vehicles are approaching cost parity.”

“The EV industry is reaching an inflection point – taking into consideration the lower maintenance and energy costs, electric and gas-fueled vehicles are approaching cost parity.”Crystal Zhu from the Investment Banking coverage team in China

“The EV industry is reaching an inflection point – taking into consideration the lower maintenance and energy costs, electric and gas-fueled vehicles are approaching cost parity.”Crystal Zhu from the Investment Banking coverage team in China

NIO opted to list in New York as the investor base has a more developed understanding of the market.

Tapping into J.P. Morgan’s strong global distribution capabilities and positioning of NIO’s story among key institutional clients, the offering was successfully priced at $6.26 per share with demand from NIO’s pre-IPO investors including global top-tier long-only funds and strategic corporates.

Established by tech entrepreneur William Li in 2014, NIO is seeking to break China’s love affair with gas and the combustion engine and tap into the world’s largest auto market with its seven-seater SUV, which owners can drive away for roughly half the price of Tesla’s equivalent Model X.

With the Chinese government offering incentives on EV adoption to curb greenhouse gas emissions and the rapid advancement of lithium battery technology, “…the size of the opportunity is massive,” said Zhu. “China represents 60% of the global EV market so firms are trying to anticipate the future; they are working to redefine the car, not just as a transportation tool, but also as a smart, connected device and, in the fully autonomous future, as an extension of people’s living space and part of their lifestyle.”

Just less than 1% of China’s 300 million car owners currently drives an electric vehicle; however, China’s EV market has grown at a CAGR of ~150% from 2013 to 2017 and is expected to grow five-fold by 2022 according to Frost & Sullivan.

The company’s first cars were delivered in June 2018. By end of August they had delivered more than 1,600 vehicles with the goal of reaching 10,000 by the end of the year.